Italy Overhauls Arbitration Law: A Deep Dive into the Cartabia Reform and Its Impact - 2025-09-25

Italy Overhauls Arbitration Law: A Deep Dive into the Cartabia Reform and Its Impact

Rome, Italy – In a landmark move designed to modernize its justice system and bolster its standing as a viable seat for international dispute resolution, Italy has enacted significant reforms to its arbitration framework. Legislative Decree 150 of 2022, widely known as the "Cartabia Law," has introduced sweeping changes to the Italian Code of Civil Procedure (ICCP), addressing long-standing criticisms and aligning the nation's rules with international best practices. This overhaul, coupled with a series of clarifying Supreme Court decisions, signals a concerted effort to enhance efficiency, empower arbitral tribunals, and attract a greater share of international disputes.

The reforms tackle critical aspects of arbitration, from the impartiality of arbitrators to the previously absent power to grant interim measures. For legal practitioners both within and outside Italy, understanding these developments is crucial for advising clients, drafting effective dispute resolution clauses, and navigating the evolving landscape of Italian civil justice.

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A Paradigm Shift: Arbitrators Granted Power for Interim Measures

Perhaps the most transformative change introduced by the Cartabia Reform is the empowerment of arbitrators to issue interim and precautionary measures. Historically, Italian arbitration law was an outlier among major jurisdictions, expressly prohibiting arbitral tribunals from granting such relief. This forced parties to resort to state courts for urgent measures, often creating parallel proceedings and undermining the efficiency of the arbitration process.

Under the new Article 818 of the ICCP, this prohibition is reversed. The provision now states, "The parties, by means of the arbitration agreement or a written act prior to the initiation of the arbitration proceedings, including by reference to arbitration rules, may grant the arbitrators the power to issue interim measures. The arbitrators’ competence on interim measures is exclusive."

This "opt-in" system grants parties the autonomy to confer this crucial power upon their chosen tribunal. The reference to institutional rules (like those of the Chamber of Arbitration of Milan (CAM) or the ICC) is particularly significant, as it allows pre-existing and future clauses that incorporate such rules to automatically include this power.

However, the transition has not been without interpretive challenges. For arbitration clauses drafted before the reform's effective date of March 1, 2023, a key question has emerged: does the new law apply retroactively? A pivotal January 2025 decision from the Tribunal of Milan addressed this directly. The court held that for an agreement signed in 2022, the parties could not have intended to grant a power that did not exist under the law at the time. It affirmed its own jurisdiction over the precautionary request, suggesting that the parties' intent at the time of contracting is paramount. This ruling indicates that practitioners must carefully review older agreements rather than assuming the new powers automatically apply.

Strengthening the Pillars of Arbitration: Independence and Impartiality

To bolster confidence in the arbitral process, the Cartabia Law has fortified the requirements for arbitrator independence and impartiality. The reform makes it mandatory for an arbitrator, upon acceptance of their appointment, to issue a written declaration disclosing any circumstances that could reasonably cast doubt on their neutrality.

Failure to provide this declaration can have severe consequences. A party may request the removal of the arbitrator, and if the issue is raised during the proceedings, the non-disclosure can serve as a ground to challenge the final award for nullity. This codifies a best practice that many institutions already followed, but makes it a binding requirement under Italian law, thereby increasing transparency and accountability.

The CAM Rules complement these legislative changes, requiring arbitrators to disclose any relationships with parties, counsel, or third-party funders that might affect their impartiality. The CAM Arbitral Council then decides on the confirmation of the arbitrator based on these disclosures and any party comments, providing an institutional safeguard.

Corporate Arbitration: Integration and Expanded Powers

Corporate disputes represent a significant portion of commercial arbitrations in Italy. The Cartabia Law has streamlined the legal framework by repealing the separate Corporate Arbitration Decree (Legislative Decree No. 5/2003) and integrating its provisions into a new chapter within the ICCP.

Crucially, the reform extends the new powers for interim relief to the corporate context. Previously, arbitrators in corporate disputes could only suspend challenged shareholder resolutions. Now, provided the company's bylaws (which contain the arbitration clause) grant such authority, arbitrators can issue a full range of interim measures. This significantly enhances the utility of arbitration for urgent shareholder and governance disputes.

The law maintains the vital safeguard that the appointment of arbitrators in corporate matters must be entrusted to a party external to the company, a rule the Italian Supreme Court has repeatedly affirmed is a mandatory requirement for the validity of the clause, even for arbitrations seated abroad (Decision No. 8911 of April 4, 2025).

Key Rulings from the Italian Supreme Court: Clarifying the New Landscape

Recent jurisprudence from Italy's highest court has provided critical guidance on the interpretation of both old and new arbitration principles.

• Kompetenz-Kompetenz Affirmed (Decision No. 26600, Oct. 14, 2024): In a major affirmation of arbitral authority, the Supreme Court ruled that Italian courts cannot hear challenges to the validity of an arbitration clause while an arbitration is already pending. It firmly upheld the principle of Kompetenz-Kompetenz , stating that the arbitral tribunal has the primary competence to decide on its own jurisdiction, with its decision only subject to challenge after the final award is rendered. This prevents parties from using parallel court proceedings as a dilatory tactic.

• Scope of Arbitration Clauses (Decision No. 2145, Jan. 30, 2025): The Court clarified that a standard arbitration clause covering disputes related to a contract's "interpretation, performance, and termination" does not automatically extend to claims of pre-contractual liability (e.g., fraudulent inducement). Such claims, rooted in law rather than the contract itself, fall outside the scope of the clause unless expressly included by the parties. This decision serves as a crucial drafting note for counsel aiming for all-encompassing dispute resolution clauses.

• Validity of Foreign-Seated Corporate Arbitration (Decision No. 8911, April 4, 2025): The Court confirmed that an arbitration clause in an Italian company's bylaws providing for a foreign seat (e.g., Geneva) is valid, so long as it complies with the mandatory Italian law requirement that arbitrators be appointed by an external third party. Other procedural rules specific to Italian corporate arbitration do not apply to foreign-seated proceedings, which are governed by the lex arbitri of the seat. This provides welcome clarity for international companies operating in Italy.

The Road Ahead: An Increasingly Attractive Seat

Italy's chronic judicial backlogs have long been an impetus for parties to seek alternative dispute resolution. The Cartabilia Reform represents the most significant legislative step yet to transform arbitration from a mere alternative into a robust, efficient, and internationally competitive option.

By empowering arbitrators with the ability to grant interim relief, codifying strict impartiality standards, and streamlining corporate dispute rules, the Italian legislator has removed major hurdles that previously made practitioners hesitant to choose an Italian seat. The proactive stance of the Supreme Court in upholding arbitral authority and providing clear interpretive guidance further strengthens this new framework.

While challenges remain, particularly in harmonizing the application of new rules to pre-existing agreements, the direction of travel is clear. Italy is making a compelling case to the international legal community that it is not only open for business but is equipped with a modern legal framework capable of handling complex commercial disputes with efficiency and sophistication.